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New York sued the U.S. over a decision to allow financial technology companies to apply for special national banking charters, saying the move is “lawless” and “ill-conceived” and will destabilize financial markets that are more effectively regulated by the state.

Maria Vullo, superintendent of the state’s Department of Financial Services, filed suit against the Office of the Comptroller of the Currency in federal court in Manhattan on Friday, asking a judge to declare that the move exceeds the authority of the office and to block it from proceeding.

The office in late July invited financial technology companies to apply for special national charters, which could potentially allow online lenders, payments firms and some cryptocurrency ventures to operate without relying on a bank, a move that has long been opposed by both the financial industry and state regulators.

The move “puts New York financial consumers — and often the most vulnerable ones — at great risk of exploitation by federally chartered entities improperly insulated by New York law,” Vullo said in the lawsuit. “The OCC’s reckless folly should be stopped.”

The U.S. government has sought to encourage more competition in banking and to streamline the process that forces companies to navigate a 50-state hodgepodge of watchdogs.

“The agency is confident in its authority to grant national bank charters including special purpose national bank charters to companies that are engaged in the business of banking, meet the qualifications for becoming a national bank, and apply to conduct business as part of the federal banking system,” Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, said in an email.

“The agency will vigorously defend that authority, but will not comment on pending or potential litigation,” he added.

New York’s chief financial regulator said she would challenge special charters if the OCC moved forward.